The Pensions Regulator (Notifiable Events) Regulations 2005 (SI 2005/900), published yesterday, set out the events prescribed for the purposes of s.69(2)(a) of the Pensions Act 2004 (duty of trustees and sponsoring employers of certain defined benefit schemes, to report the occurrence of specified notifiable events to the Pensions Regulator (TPR) as soon as reasonably practicable). These are the events which TPR considers are relevant to either the funding position or the governance of the scheme and will affect the security of members' benefits.

Notification thereof might provide TPR with an early warning of potential claims on the Pension Protection Fund (PPF) resulting from the risk of either employer insolvency or scheme underfunding. This will give TPR a chance to intervene before any PPF assessment period. The requirement to notify only applies to schemes that could be eligible for PPF compensation and are liable to the PPF levies, and their sponsoring employers.

As with the Winding up etc Regulations, these Regs will breach the 21-day rule. It was considered vital that they be in force tomorrow, when TPR and the PPF open for business. However, a short informal consultation last month on draft regs (in which Aries participated) elicited a high number of detailed comments, consideration of which further delayed the final drafting.

DWP recognised the importance of striking the right balance between protecting members and the PPF on the one hand and increasing the reporting burden (and thus costs) of employers and pension schemes on the other. As originally drafted, there was greater potential for TPR to be swamped, as Opra has been, with large numbers of reports which in fact involved no significant risk at all. Fortunately, on this occasion many of the suggested changes to the draft regs have been accepted, and included verbatim in an unusually full Explanatory Memorandum [PDF] to the SI.

The Pensions Regulator (Contribution Notices and Restoration Orders) Regulations 2005 (SI 2005/931) relate to the 'moral hazard' provisions in ss.38 and 52 of the Pensions Act 2004. The regs prescribe the few types of scheme which will not be subject to the moral hazard powers and also extend the persons on which the Regulator can serve a restoration order where there has been a transaction at an undervalue. A person who is prescribed for the purposes of s.52(7)(a) (Restoration orders where transactions at an undervalue) is any person whom the trustees or managers of the scheme have authorised to enter into transactions involving the assets of that scheme.

As with the Notifiable Events Regs, to ensure these regulations are in force tomorrow the DWP has had to breach the 21-day rule. The excuse offered is that the powers under which these regulations are made were settled very late during the passage through Parliament of the Pensions Act 2004. There was no formal requirement to consult in this case because the Regulations are being made within six months of the enabling powers of the Act coming into force (s.317(2) of the Act). DWP says there has been informal consultation on the policy but not detail of these Regulations.

Note: There are three 'moral hazard' powers in the Act. Sandwiched between ss. 38 - 42 (Contribution notices where avoidance of employer debt) and ss. 52 - 56 (Transactions at an undervalue) there is substantial legislation in ss.43 - 51 on "Financial support directions" (FSDs). It was originally proposed to make regulations in relation to all three of those powers, but unsurprisingly, perhaps in view of their contentious nature, the regulations needed to bring FSDs into effect have proved particularly complex. DWP has reluctantly decided that further work on these is necessary, and they will almost certainly miss the 6 April 'deadline'.